What are the prospects for the world’s still highly integrated economy? In answering this question, one has to start with the underlying forces at work.
The most fundamental are changes in economic opportunities. These include reductions in costs of transport and communications, shifts in comparative advantage and changing opportunities for exploiting economies of scale and learning by doing. No less crucial, particularly in the short and medium run, are changes in economic ideas and geopolitical realities. Finally, shocks — wars, crises and pandemics — also shift the perceptions of business, peoples and politicians of the risks, costs and benefits of cross-border integration.
The history of cross-border integration, especially trade, illuminates the interplay among these forces.